Economy under attack

The fluctuation in the price of oil in the last few weeks was not due strictly to economic principles, including supply and demand.

There must have been other reasons for the quite steep drop in the price of oil. 

When oil prices change in a dramatic way, obviously currency rates, gold prices and a host of other financial and economic indicators change as well.

The “conflict” between Washington and its other Western allies and Moscow has taken an economic and financial form since economic sanctions were applied against Russia after the Crimean crisis last year and the continuing confrontation in eastern Ukraine.

Russia’s economy is heavily dependent on oil; when oil prices drop steeply and fast, its economy follows suit.

This suggests, or rather reinforces the hypothesis, that lowering the price of oil is deliberate and dictated more by political consideration than by the play of supply and demand.

It has been reported that Russian President Vladimir Putin reacted to this Western threat by ordering the dumping of the US currency, in a desperate bid to weaken it and eventually undermine the US economy.

Oil-producing countries are caught between this two superpowers’ “war”.

Iran and Venezuela, for example, have fought hard to halt the dramatic drop in the price of oil by calling on OPEC, the oil producing cartel, to reduce oil production. 

This bid was rejected when OPEC nations met at the end of last month.

The only explanation for the fact that the majority of oil-producing countries opted to keep their oil production high, and therefore the prices of oil down, despite the obvious fact that it hurts them financially and economically, is politics.

The OPEC countries that rejected the call to scale down oil production have obviously sided with the US in its confronting with Russia. 

Russia is now predicting a recession in 2015. This could lead to the continuation of the economic war between Washington and Moscow, with, as a result, an economic slowdown not only in Russia, but also beyond.

Still, an economic war is preferable to one waged with bullets and bombs.